Enzon Inc. (ENZN, Financial) filed Quarterly Report for the period ended 2009-09-30.
Enzon Pharmaceuticals Inc. is a biopharmaceutical company dedicated to the development and commercialization of therapeutics to treat patients with cancer and adjacent diseases. Enzon's specialized sales force markets ABELCET ONCASPAR ADAGEN and DEPOCYT in the United States. In addition Enzon also receives royalties on sales of PEG-INTRON marketed by Schering-Plough Corporation and MACUGEN marketed by OSI Pharmaceuticals and Pfizer Inc. Enzon's product-driven strategy includes an extensive drug development program that leverages its proprietary technologies including a Customized Linker Technology PEGylation platform that utilizes customized linkers designed to release compounds at a controlled rate. Enzon also utilizes contract manufacturing opportunities to broaden its revenue base and enhance its organizational productivity. Enzon complements its internal research and development efforts with strategic initiatives. Enzon Inc. has a market cap of $382.7 million; its shares were traded at around $8.43 with and P/S ratio of 1.9.
On a nine-month year-to-date basis, we recognized a pretax operating income of $0.5 million in 2009 compared to a loss of $1.8 million in 2008. Products segment profit rose during 2009 compared to the corresponding nine-month period of 2008 due to a 3 percent growth in sales and combined reductions in cost of sales and selling and marketing expense partially offset by higher spending on research and development. Lower royalties in the first nine months of 2009 than in the first nine months of 2008 and a loss in contract manufacturing profitability offset the rise in Products segment profits. Lower corporate and other expenses in the nine-month comparison contributed to the overall improvement in pretax earnings. A net gain of $4.5 million on the repurchase of notes payable during the first quarter of 2009 favorably affected the results while spending on corporate research and development rose.
Net product sales for the three months ended September 30, 2009 were relatively unchanged from the same period in 2008. Sales of our oncology product, Oncaspar rose approximately 9 percent due to volume during the quarter when compared to the prior year while an accrual for chargebacks of $0.9 million offset this increase in the quarter. At September 30, 2009, we recorded an accrual for prior-period chargebacks claimed by certain wholesalers which are currently under dispute by us. An accrual was established totaling approximately $1.0 million primarily related to Oncaspar. We are in the process of reviewing these disputed chargeback claims. Depending upon the outcome of the review, we may incur an additional charge or we may reverse all or a portion of the current accrual. Adagen rose 10 percent, due to timing of orders, and Abelcet declined 15 percent, because of competition, in the September three-month year-to-year comparisons.
Cost of sales of marketed products declined to $8.9 million, or 31 percent of sales for the three months ended September 30, 2009 compared to $10.4 million, or 36 percent of sales, for the comparable three-month period of 2008. Adversely affecting the 2008 margins was the write-off of certain batches of Oncaspar during the third quarter of 2008 amounting to approximately $2.0 million related to the transfer of technology and consolidation of activities at our Indianapolis, Indiana facility (see Restructuring). Cost of sales of marketed products for the first nine months of 2009 was 31 percent of sales compared to 41 percent in the first nine months of 2008. The improvements in gross margin period-over-period, reflect in large part efficiencies derived across all products from the consolidation of our manufacturing facilities. There was also a favorable effect on gross margins attributable to product mix. In addition, during the first nine months of 2009, we wrote off certain Adagen inventory due to the identification of some batches trending to go out of specification prior to expiration of their shelf life and provided replacement product to customers. These events amounted to approximately $0.5 million and negatively affected margins. The first nine months of 2008 amounts included $1.9 million immediate amortization of a $5.0 million licensing intangible milestone payment that was triggered during that period.
Research and development spending on marketed products, primarily Oncaspar and Adagen, was lower in the third quarter of 2009 than in the prior-year third quarter by $0.1 million. On a year-to-date basis, research and development rose $7.8 million to $19.5 million in 2009 from $11.7 million the previous year. We continue our programs to improve the manufacturing processes and pharmaceutical properties of both Oncaspar and Adagen and are now working towards commercial approval. As previously reported, we have transferred the cell line and will complete the transfer of manufacturing of L-asparaginase to our own subcontractor by the beginning of 2010. We will continue to invest in programs to enhance and secure the supply of Oncaspar and Adagen.
Selling and marketing expenses consist primarily of sales and marketing personnel, other commercial expense and marketing programs to support our sales force as well as medical affairs activities. Selling and marketing expenses for the three months ended September 30, 2009 were $5.9 million, down 21 percent from $7.6 million in the third quarter of 2008. Year-to-date, selling and marketing expenses decreased 15 percent to $18.8 million in 2009 from $22.1 million in 2008. The decreases resulted from our continued selective spending in the selling and marketing programs and, in part, from the first-quarter 2009 restructuring, discussed below.
Read the The complete ReportENZN is in the portfolios of Carl Icahn of Icahn Capital Management LP, Michael Price of MFP Investors LLC, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, Kenneth Fisher of Fisher Asset Management, LLC, Kenneth Fisher of Fisher Asset Management, LLC.
Enzon Pharmaceuticals Inc. is a biopharmaceutical company dedicated to the development and commercialization of therapeutics to treat patients with cancer and adjacent diseases. Enzon's specialized sales force markets ABELCET ONCASPAR ADAGEN and DEPOCYT in the United States. In addition Enzon also receives royalties on sales of PEG-INTRON marketed by Schering-Plough Corporation and MACUGEN marketed by OSI Pharmaceuticals and Pfizer Inc. Enzon's product-driven strategy includes an extensive drug development program that leverages its proprietary technologies including a Customized Linker Technology PEGylation platform that utilizes customized linkers designed to release compounds at a controlled rate. Enzon also utilizes contract manufacturing opportunities to broaden its revenue base and enhance its organizational productivity. Enzon complements its internal research and development efforts with strategic initiatives. Enzon Inc. has a market cap of $382.7 million; its shares were traded at around $8.43 with and P/S ratio of 1.9.
Highlight of Business Operations:
For the three months ended September 30, 2009, the Products and Royalties segments were profitable whereas the Contract Manufacturing segment experienced a loss. Corporate and other expenses declined in comparison with the three months ended September 30, 2008. This resulted in a pretax operating loss of $0.7 million for the third quarter of 2009 compared to a $1.9 million loss for the three months ended September 30, 2008. In the Products segment, revenues were relatively flat compared to the prior year three-month period primarily as a result of an accrual for prior-period chargebacks claimed by certain wholesalers which are currently under dispute by the Company. Improvements in both cost of sales and selling and marketing expenses served to generate the majority of the Products segment profit for the quarter. Royalty revenues in the third quarter of 2009 were lower when compared to the same quarter of 2008 primarily due to lower sales of PEGINTRON. Contract manufacturing revenues and earnings were negatively affected primarily by our MVI processing operations. Because of the customer rejection of a number of batches, no shipments were made during the third quarter of 2009 and a write-down of finished goods and raw material inventories related to the product was recorded.On a nine-month year-to-date basis, we recognized a pretax operating income of $0.5 million in 2009 compared to a loss of $1.8 million in 2008. Products segment profit rose during 2009 compared to the corresponding nine-month period of 2008 due to a 3 percent growth in sales and combined reductions in cost of sales and selling and marketing expense partially offset by higher spending on research and development. Lower royalties in the first nine months of 2009 than in the first nine months of 2008 and a loss in contract manufacturing profitability offset the rise in Products segment profits. Lower corporate and other expenses in the nine-month comparison contributed to the overall improvement in pretax earnings. A net gain of $4.5 million on the repurchase of notes payable during the first quarter of 2009 favorably affected the results while spending on corporate research and development rose.
Net product sales for the three months ended September 30, 2009 were relatively unchanged from the same period in 2008. Sales of our oncology product, Oncaspar rose approximately 9 percent due to volume during the quarter when compared to the prior year while an accrual for chargebacks of $0.9 million offset this increase in the quarter. At September 30, 2009, we recorded an accrual for prior-period chargebacks claimed by certain wholesalers which are currently under dispute by us. An accrual was established totaling approximately $1.0 million primarily related to Oncaspar. We are in the process of reviewing these disputed chargeback claims. Depending upon the outcome of the review, we may incur an additional charge or we may reverse all or a portion of the current accrual. Adagen rose 10 percent, due to timing of orders, and Abelcet declined 15 percent, because of competition, in the September three-month year-to-year comparisons.
Cost of sales of marketed products declined to $8.9 million, or 31 percent of sales for the three months ended September 30, 2009 compared to $10.4 million, or 36 percent of sales, for the comparable three-month period of 2008. Adversely affecting the 2008 margins was the write-off of certain batches of Oncaspar during the third quarter of 2008 amounting to approximately $2.0 million related to the transfer of technology and consolidation of activities at our Indianapolis, Indiana facility (see Restructuring). Cost of sales of marketed products for the first nine months of 2009 was 31 percent of sales compared to 41 percent in the first nine months of 2008. The improvements in gross margin period-over-period, reflect in large part efficiencies derived across all products from the consolidation of our manufacturing facilities. There was also a favorable effect on gross margins attributable to product mix. In addition, during the first nine months of 2009, we wrote off certain Adagen inventory due to the identification of some batches trending to go out of specification prior to expiration of their shelf life and provided replacement product to customers. These events amounted to approximately $0.5 million and negatively affected margins. The first nine months of 2008 amounts included $1.9 million immediate amortization of a $5.0 million licensing intangible milestone payment that was triggered during that period.
Research and development spending on marketed products, primarily Oncaspar and Adagen, was lower in the third quarter of 2009 than in the prior-year third quarter by $0.1 million. On a year-to-date basis, research and development rose $7.8 million to $19.5 million in 2009 from $11.7 million the previous year. We continue our programs to improve the manufacturing processes and pharmaceutical properties of both Oncaspar and Adagen and are now working towards commercial approval. As previously reported, we have transferred the cell line and will complete the transfer of manufacturing of L-asparaginase to our own subcontractor by the beginning of 2010. We will continue to invest in programs to enhance and secure the supply of Oncaspar and Adagen.
Selling and marketing expenses consist primarily of sales and marketing personnel, other commercial expense and marketing programs to support our sales force as well as medical affairs activities. Selling and marketing expenses for the three months ended September 30, 2009 were $5.9 million, down 21 percent from $7.6 million in the third quarter of 2008. Year-to-date, selling and marketing expenses decreased 15 percent to $18.8 million in 2009 from $22.1 million in 2008. The decreases resulted from our continued selective spending in the selling and marketing programs and, in part, from the first-quarter 2009 restructuring, discussed below.
Read the The complete ReportENZN is in the portfolios of Carl Icahn of Icahn Capital Management LP, Michael Price of MFP Investors LLC, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, Kenneth Fisher of Fisher Asset Management, LLC, Kenneth Fisher of Fisher Asset Management, LLC.
